FLYBE, which operates several services out of Southampton, has warned its shareholders that the company will be wound up if they do not back a sale to a consortium led by Virgin Atlantic, haulage firm Eddie Stobart and US private equity firm Cyrus Capital.

Last month the airline's board agreed to sell to the Connect Airways group for £2.2m, a rock bottom price, valuing the shares at about 1p each.

Angry shareholders argued the company had bene grossly undervalued

Yesterday the board told shareholder this was the only deal on the table and without it their shares would be worth nothing.

The company has been seeking a buyer since November.

In a statement on Thursday, Flybe said: "If the [sale] scheme is not approved, the Flybe directors intend to take steps to wind-up the company and shareholders are likely to receive no value for their shares in Flybe.

“Accordingly, the Flybe directors believe that the terms of the acquisition remain in the best interests of Flybe shareholders as a whole and unanimously recommend that Flybe shareholders vote in favour of the resolutions to be proposed at the court meeting and the general meeting.”

A date for a shareholders's meeting to discuss the sale has yet to be set.

The British airline based in Exeter is the largest independent regional airline in Europe.

It carries eight million passengers a year between 81 airports across the UK and the rest of Europe, with over 210 routes across 15 countries.

Flybe said it had been facing a "challenging market"made worse by the weak pound and rising fuel prices.